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TD Securities analysis team notes that the RBA Governor’s testimony to the House of Representatives provided no indication the Bank is considering cutting the cash rate soon.

Key Quotes

“Governor Lowe noted “As was the case six months ago, it does not see a strong case for a near-term change in the cash rate.”

“The RBA can take comfort that businesses are holding up better than NAB’s Dec Survey suggested (Q4 capex/Jan employment were strong), helping to provide a cushion against the soft consumer.”

“The RBA will not be privy to Wed’s Q4 GDP outcome. Although the risks to the RBA’s implied 0.6%/q forecast is to the downside, a cut by April or May appears unlikely given the medium term emphasis. We pay May OIS at 1.4525%, target 1.50%, stop 1.42%, A$50k/bp.”